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Show Sugar Beet Are Bankable Security In an article written for Through The Leaves, and which will be of interest in-terest to growers of sugar beets, Wallis D. Wilson of the Bank Relations Rela-tions department of the Federal Reserve Bank of Kansas City, calis attention to one advantage enjoyed by the farmer who grows sugar beets -Mt w'1'c'1 ntiee is not often directed, his is the superiority of the beet crop to practically all others as an instrument of credit. At a time when all sorts of measures for improving the credit equipment of farmers, including in-cluding direct government aid and various other forms of organized assistance, are under discussion, this is a consideration of particular importance. im-portance. As explained by Mr. Wilson the Federal Reserve Bank can make no loans direct to fanners or business men, but it can and does rediscount certain classes of approved paper offered by it member banks when such notes are properly secured and , are in negotiable form. Livestock is recognized as a proper security, as aie stocks of merchandise and crops of grain or other salable products pro-ducts when deposited in warehouse. The farmer's special need, however, is to obtain funds or credit to aid him in making his crops. His expenses ex-penses begin with the preparation of his fields and the purchase of seed. They continue during the period of cultivation and harvest. His returns are received only at the end of the season when his crops are sold. Local banks serving agricultural communities communi-ties recognize this need and make very large aggregate loans to farmers farm-ers on the security afforded by their property or by their reputations for probity and good management. Such paper, however, is not available for rediscount by the Federal Reserve Bank. The Kansas City Federal Reserve Bank, with which Mr. Wilson is connected, con-nected, covers the district including the states of Colorado, Wyoming, Nebraska, Ne-braska, and Kansas, as well as parts of three others. A great variety of crops are cultivated in this district but among them all, as he points out, the only one which is regarded as good security for rediscount while in the growing state is sugar beets. The reason for this is twofold. In the first place, practically all these crops except beets, including the two great staples wheat and corn, may be wiped out by the ravages of pests, by drouth, hail, or other unfavorable weather conditions. ' Sugar beets,, however, are much less seriously affected by weather variations and practically never score a complete failure. In the second place, the price to be realized by other crops is uncertain; un-certain; it may not be enough to pay the cost of seed and labor. In the case of sugar beets, however, the grower is assured a fixed minimum price for his crop. He holds a contract con-tract form a responsible company obligating the latter to the payment of a specified sum per ton directly following delivery of his crop to the factory and provision can be made for payment to run to the bank making mak-ing the loan, or jointly to the bank . and the grower if it is so desired. Thus the bank making a loan on a growing crop of sugar beets has security which is considered practically practi-cally as substantial as the stocks of merchandise on the storekeeper's . :,- shelves. As Mr. Wilson says, "The fact that the Federal Reserve Bank of Kansas City, through its branches, accepts notes from its member banks based upon growing beet crop is a good reason for the members banks preferring this class of paper. It is also a good reason for the farmer selecting this crop as his primary one." |